GRAPHIC-DOUBLE WHAMMY FOR FOOD BUYERS AS FREIGHT COSTS SPIKE AMID HIGH GRAIN PRICES
Rising costs to ship crops globally are adding to concerns about food inflation that are already at decade-highs and hitting cost-sensitive consumers in import-dependent markets. The cost of bulk carriers that move grains and oilseeds from production hubs in the Americas and Black Sea to key consumers have roughly doubled from last year due to rising fuel costs, tighter vessel supply and longer port turnaround times amid COVID-19 curbs, according to grain and shipping sources.
“Freight cost has become a real challenge as it comes when we see huge increases in grain prices,” said Phin Ziebell, agribusiness economist at National Australia Bank in Melbourne. “For years, buyers enjoyed low grain and freight prices. I see no immediate end to high freight costs.” The cost of moving grains from Australia to Southeast Asia has risen to $30 a tonne from $15 last year, and to $55 from $25 from the U.S. Pacific Northwest to Asia, shipping sources said.
Ships carrying wheat from the Black Sea to Asia now cost around $65 a tonne, from around $35 last year. “It is the cost of bunker fuel and the cost of bulk ships lifting the prices of carrying grains,” said one trader at a leading brokerage in Singapore. “We also have COVID-19 quarantine requirements slowing cargo movement.”
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